Reducing Inequality on the Cheap: When Legal Rule Design Should Incorporate Equity as Well as Efficiency

Abstract

This Note develops a framework for understanding when policymakers should use equity-informed legal rules -rather than taxes -to redistribute. First, policymakers should choose the most efficient way to reduce income inequality, which may involve allocating legal entitlements to the poor, depending upon several factors described in the Note. Second, sometimes legal rules ought to account for non-income characteristics based upon which the tax system would be poorly equipped to redistribute.